Introduction In 2017, OSPE…

Introduction

In 2017, OSPE identified that there was significant surplus clean energy that was being wasted (curtailed) or exported at prices that did not recover the full costs of the electricity capacity (infrastructure). See OSPE’s report entitled “Empower Ontario’s Engineers to Obtain Opportunity – An Analysis of Ontario’s Clean Electricity Exports” from November 2017. OSPE proposed that this surplus clean electricity be used to de-carbonize other sectors such as transportation and building heating to reduce greenhouse gas emissions. OSPE supports encouraging more electric cars being purchased and used to take advantage of the surplus clean electricity supply and using the surplus clean electricity to produce hydrogen that can be injected in the natural gas grid as a clean heating fuel or to power hydrogen fuel cell cars. OSPE does not support repealing the GEA.

Ontario Jobs & the Economy

OSPE, like the current government, is interested in increasing job opportunities for Ontarians and attracting capital investment, both local and foreign, into Ontario. The Green Energy Act, although not as cost effective as it could have been, achieved its purpose to establish Ontario as one of the leading Clean Technology jurisdictions in North America and even globally. Before the announcements of the government’s intentions to cancel GreenON (the umbrella organization running all greenhouse gas reduction programs), to cancel the Cap & Trade program (which brought in $2B in annual revenue to be used to fund greenhouse gas reducing projects/technologies and, as a market-based mechanism, was a Conservative solution to carbon pricing) and to repeal the Green Energy Act, there were 130,000 Ontarians employed in Cleantech and environmental businesses generating $19.9B in annual revenue (source: Investinontario.com). The global market for low-carbon goods and services is worth $5.8 trillion, growing at 3% per year (source: CleanEnergy Canada).

By repealing the Green Energy Act, a large portion of those 130,000 jobs is at risk of disappearing entirely and/or leaving Ontario as well as a reduction in government tax revenue from the $19.9B in Cleantech business revenue and a large reduction in capital investment. The impacts of repealing the GEA will be felt for a generation as foreign investors will choose never to invest in Ontario again when there are many other jurisdictions globally that support renewable energy.

Unlike procurement of oil and gas, most of the funds paid to electrical generators stays and re-circulates in Ontario, stimulating the economy. Eliminating fossil fuel subsidies would create government revenues that could be used to reduce electricity bills, while leading to greenhouse gas emissions reductions.

A key priority of the Ontario government is to create more jobs and grow the economy for the people. By repealing the Green Energy Act, the government will lose out on a multitude of economic opportunities in the green energy sector and see its competitive advantage in this sector erased.

GEA Contract Mechanism

One of the issues with the GEA was the contract mechanism that led to economically unsustainable long term guaranteed prices to renewable energy developers. OSPE does support incorporating renewable energy into market renewal so that there will be a competitive process for procuring renewable energy. However, market renewal is several years away from being implemented, and, rather than repeal the Green Energy Act, OSPE encourages the government to simply amend the act to deal with the main issue which was guaranteed fixed, high revenue to renewable energy developers through the Feed-in-Tariff program. Procurement should also be outcome driven and technology agnostic, so specific renewable technologies such as mandating a certain amount of solar energy vs. wind energy should not be used.

Energy Efficiency & Energy Conservation & Reporting

The GEA also governs energy efficiency and energy conservation, two important pillars for economic competitiveness of manufacturers and important pillars for reducing home owners and small and medium businesses’ energy bills. It was noted that most of the clauses related to energy efficiency and energy conservation will be transferred from the GEA into the Electricity Act, 1998. OSPE supports keeping energy efficiency and energy conservation as important principles that should be in a government act.

It was noted that consideration of energy efficiency for procurement of goods & services as well as consideration of energy efficiency for capital investments for public agencies was removed from the GEA and not re-instated in the Electricity Act. In addition, transactions, arrangements, and agreements to promote energy conservation as well as clause 10 related to guiding principles for energy conservation for government facilities were removed and not re-instated. Ensuring that home sellers must disclose energy consumption when asked by potential buyers is also removed in Bill 34. We are encouraged to see Energy Efficiency/Conservation reporting will continue. OSPE recommends that the government create an amendment to Bill 34 to re-instate the above clauses into the Electricity Act. Also, encouraging renewable energy generators to be energy efficient within their own facilities should be encouraged to reduce electricity generation costs.

Municipal Authority

OSPE noted that Bill 34 will return authority to approve or not approve renewable energy projects to the municipal planning authority and that no appeals will be allowed once a renewable energy project is not approved by the Local Planning Appeal Tribunal. OSPE seeks clarification whether renewable energy projects that do not meet the new “electricity need/demand requirement” can apply for a full Energy Approval?

Renewal Energy Approval Process

The Independent Electricity System Operator (IESO) is a qualified technical body. OSPE supports leveraging the IESO’s expertise and its reports/data to implement the Renewal Energy Approval process.

OSPE notes that Bill 34 will require renewable energy developers to prove there is a need (i.e. electricity demand) for their project. This is a reasonable request if there is a common requirement for all types of generation to prove. Based on renewable energy pricing now competing without incentives with conventional generation, when demand is greater than supply in the future, there should be an easy mechanism to procure renewable energy and obtain renewable energy approvals. Thus, OSPE urges the government to keep the Green Energy Act as a framework that will be useful in the future when additional procurement of renewable energy is needed.

Transitional Matters

Also, OSPE notes that Bill 34 calls for modifications to the Ontario Energy Board Act that contain several transitional matters that are cause for concern. OSPE would like clarification as it appears that the Bill would enable a retroactive effect for a cancellation of a renewable energy approval and that no remedy would be allowed and all proceedings could be barred.

Energy Storage

OSPE also urges the government to invest and incentivize energy storage. It should be noted, however, that there are alternative, cheaper solutions rather than energy storage that exist today that can be used to provide higher integration of renewable energy in the grid. The historical premium for reliable baseload will not be worth as much as it once was, in part because residential demand, for example, is now more flexible and will continue to be more flexible with smart appliances such as smart thermostats and electric vehicle charging. In the US, residential electricity demand-side flexibility as a percentage of current generating capacity will double from 3 to 7% in the next 5 years, and Ontarians have access to the same technology. This means that electricity demand can be adjusted locally through smart grids enabling better renewable energy generation integration (Wood Mackenzie Power & Renewables 2018).

Conclusion

In closing, OSPE does not support repealing the GEA. Rather we encourage the government to simply amend the act to deal with the main issue which was guaranteed fixed, high revenue to renewable energy developers through the Feed-in-Tariff program. OSPE again recommends that the government create an amendment to Bill 34 to re-instate the energy efficiency clauses mentioned earlier into the Electricity Act. Furthermore, we urge the government to keep the Green Energy Act as a framework for the future and encourage the government to invest and incentivize energy storage.